R865.4bn to be spent on public sector infrastructure

Government and state-owned companies (SOCs) is set to spend R865.4 billion on public sector infrastructure, over the course of the next three years.

This as Finance Minister Pravin Gordhan on Wednesday tabled the 2016 Budget.

“Over the next three years, government and state-owned companies have committed R865.4 billion for investments in housing, roads, rail, public transport, water, electricity and community infrastructure,” said the 2016 Budget Review.

It said government is strengthening its collaboration with the private sector, labour and civil society, to speed up implementation of the structural reforms set out in the National Development Plan. Public-sector infrastructure spending over the medium term is expected to total R865.4 billion.

According to the budget, public-sector infrastructure spending remains a cornerstone of government’s commitment to building a more agile, competitive economy.

Tabling the budget in Parliament, Minister Gordhan said investment in energy will amount to R70 billion in 2016 and over R180 billion over the next three years, as construction of the Medupi, Ingula and Kusile power plants is completed.

Transport and logistics infrastructure will account for nearly R292 billion over the next three years.

State-owned company, Transnet, is acquiring 232 diesel locomotives for its general freight business and 100 locomotives for its coal lines.

In addition, there is R3.7 billion set aside to upgrade the Moloto Road, R30 billion for provincial roads maintenance, R18 billion for bus rapid transit projects in cities and the refurbishment of over 1700 Metrorail and Shosholoza Meyl coaches.

Minister Gordhan added that R62 billion is allocated for the housing subsidy programmes of the Department of Human Settlements and R34 billion for bulk infrastructure and residential services in metropolitan municipalities.

Also, R28 billion will be spent over the Medium Term Expenditure Framework (MTEF) on improving health facilities and R54 billion on education infrastructure.

The Department of Water and Sanitation’s work on the next phase of the Olifants River water scheme is in progress, completion of the supply to Lukhanji Municipality in the Eastern Cape, completion of the Wolmaransstad waste water treatment works and construction of the Polihali Dam as part of the Lesotho Highlands project, is also in progress.

Minister Gordhan said the Industrial Development Corporation continues to play a leading role in financing manufacturing and beneficiation. It plans to invest R100 billion over the next five years, including R23 billion set aside to support black industrialists.

Government has also completed a R7.9 billion capital transfer to the Development Bank of Southern Africa, approved in 2013, which enables it to expand lending and implementation support to municipalities, and to complement private sector funding of strategic infrastructure projects.

The Minister announced that the New Development Bank will open its Africa Regional Centre in Johannesburg, in March.

South Africa’s first instalment of R2 billion was paid in December last year, and the Budget makes provision for further commitments over the medium term.

“This initiative gives impetus to our role as a financial centre for Africa, and will facilitate access to global finance by African investors and institutions,” said Minister Gordhan.

Incentives

Government has a range of targeted incentives to support industrialisation.

“A total of R10.2 billion over the medium term has been allocated to manufacturing development incentives and R3.4 billion to the special economic zones programme, largely for bulk infrastructure,” noted the budget review.

The infrastructure programmes in industrial parks will receive additional funding of R260 million in 2016/17 and 2017/18 through reprioritisation.

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